Finance Minister Nirmala Sitharaman on Saturday announced the abolition of dividend distribution tax (DDT).
The minister said revenue foregone due to DDT removal will be Rs 25,000 crore.
The finance minister said dividends will now be taxed in the hands of recipients.
Amar Ambani, Senior President and Research Head, YES Securities said taxation of DDT in hands of investors at their IT slab rate is a negative move for domestic investors.
The government currently taxes at the rate of 20.35 per cent (including cess and surcharge) on dividends distributed by companies to their shareholders. This results in less money in the hands of investors.